Should I Be Using My Work Van For Personal Use?
It’s a question asked by tradespeople and self-employed van drivers alike: if I have access to a work vehicle, am I allowed to use it for personal reasons? The short answer is yes, you can, but there is a rather large catch. If a company-owned van is solely used for business purposes, then it is not considered taxable. However, if an employee uses a work van for personal use, it then becomes susceptible to company van tax, and they must pay Benefit In Kind (BIK) to HMRC.
What is Personal Use?
Personal use, or private use, is defined as anything other than using your vehicle for business purposes. Exemptions are made for the journeys taken by employees driving to and from work, but anything beyond that would likely be deemed personal use. The occasional trip to the doctor’s or stopping on your way to work to grab a coffee is alright, but if you’re using your van on the school run, or in the evening and at weekends, this is considered private use.
Many modern vans are fitted with tracking software, and your employer is legally required to notify HMRC if the vehicle is being used for personal reasons. It’s also likely that you’ll have to keep a record of mileage, so that any discrepancies will be obvious to your employer or the authorities.
What is Benefit In Kind?
Benefit in Kind is the value of something that constitutes a perk. Because having the use of your work van for personal reasons is deemed a benefit on top of your salary, you must pay tax as a result. Vans currently amount to a flat rate of £3500 in BIK, and if your company pays for your fuel, there is an additional BIK standard value of £699. In the event that an employee cannot use their van for 30 consecutive days, or an employee pays their employer directly to use the van privately, this amount can be reduced.
What about electric vans, then? The great news is that, because the Government is trying to encourage businesses to switch to zero-emission vehicles, at present the BIK electric van rate is £0, and there is no van fuel benefit charge either.
How Do I Pay Benefit In Kind?
Fortunately, employees don’t have to pay the full standard value of Benefit In Kind to HMRC. Instead, a percentage of the BIK value is paid based on the employee’s own personal tax obligations. For instance, if you pay 20% tax, you pay 20% of the BIK value. The standard tax payable on a van is thus £700, which works out as £58.33 per month. Naturally, if you pay the 40% tax rate, these figures double.
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